Insurance industry ad blitz to preempt Medicare cuts

This time around, the insurance industry isn’t even waiting for the Obama administration to threaten cuts to private Medicare plans: It’s launching a peremptory strike.

America’s Health Insurance Plans announced an all-out advertising campaign Tuesday. Maintaining the same“Seniors are Watching” theme of more general ads last fall, the new seven-figure campaign is the group’s biggest mobilization to date for Medicare Advantage, a spokesman said. It comes in advance of an annual notice that sets the plans’ payment rates for the upcoming year and is focused on that issue.

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The new ads will appear in Washington-area buses next week, and the campaign will expand to include TV, print and digital promotions, as well as grass-roots mobilization of the Coalition for Medicare Choices, an advocacy group that AHIP says includes 1.5 million seniors — who are “ready to defend the Medicare Advantage coverage they like and want to keep,” according to one aggressive message.

The blitz specifically targets the Centers for Medicare & Medicaid Services. It follows a successful campaign last year to reverse a 2.3 percent cut the agency had proposed, an effort marked by strategically placed ads as well as influential letter writing.

Every February, CMS releases a notice of proposed pay rates for Medicare Advantage plans for the following fiscal year. The estimate is supposed to be based largely on expected health care costs, which of late have been growing at a historically slow rate.

For the past decade the calculation has assumed that a draconian cut to physician payments, called for by the sustainable growth rate formula, would take effect and reduce those expected costs — when in fact Congress has reversed the physician cuts each year. A bill moving through Congress would permanently repeal the flawed formula.

The pressure brought to bear by the industry in 2013, which included advertising in New York, Pennsylvania and Louisiana and letters from at least 160 supportive lawmakers, forced CMS to reverse its standard assumption. Instead of a 2.3 percent cut, the plans saw a 3.3 percent increase.

This year could be different, however. Because of the way the calculations are made, low-ball estimates of spending one year because of the SGR typically leads to offsetting higher payments the following year. If CMS follows the same methodology this year, the private Medicare plans would not receive that compensation.

The 2013 adjustment “just moved up when the plans got the extra bump,” said Edwin Park, a Medicare expert at the Center on Budget and Policy Priorities.

The campaign comes as Medicare Advantage faces a host of payment reductions and fees under the Affordable Care Act, as well as cuts from the budget sequester.

“This is just setting the stage so that when the 2015 announcement comes out, AHIP will try to argue that these are new cuts,” Park said. “But there are no new cuts.”

More than 14 million people are enrolled in the private Medicare Advantage plans — about one-fourth of the total in the federal health care program for seniors. On average, the government spends more per person on Medicare Advantage than on Medicare, in part because the private plans offer additional benefits.

Certain ACA provisions were designed to bring the private Medicare payments in line with the traditional program. But the insurance industry hopes that the plans’ popularity with seniors will convince CMS to avoid proposing any cut next month, saying that plan choices and benefits could be limited as a result.

“If CMS doesn’t keep Medicare Advantage payment rates flat next year, it is going to create a huge political problem for members of Congress this fall when they have to face millions of angry seniors who just found out they are losing benefits and choices they were promised they could keep,” said an insurance industry source familiar with the campaign.